Analysis: A "Hidden Bear Market" Is Unfolding in US Stocks, With 75% of Tech Stocks Already in Bear Market Territory

Odaily reports: The Kobeissi Letter posted on the X platform that the Nasdaq 100 index has shed approximately $4 trillion in market value in 25 days, with AI stocks falling more than 13% in October, while the S&P 500 excluding AI stocks rose 8% over the same period and hit a record high on Friday. The S&P 500 is currently just 3.5% away from its all-time high, yet about 58% of its constituents are down at least 20% from their respective peaks, 75% of tech stocks have entered bear market territory, and within the information technology sector, as many as 91% of stocks are down at least 10% from their highs.

The Kobeissi Letter believes that the current selling pressure is concentrated mainly in tech-related stocks, and that most investors, given their heavy tech exposure, are feeling market stress far greater than what the major indices reflect. It also notes that record-scale capital expenditure by companies investing in the AI technology revolution, along with a normal market correction, may lay the foundation for the next leg up, and expects the market to remain highly volatile in November.